Grade Level: 5
The Case of the Disappearing Paycheck
Lesson: 1
Lesson Description
In this lesson students first offer what they know about taxes. They then jigsaw an
article on taxes written by a fellow fifth grader. Groups present the information
that they feel is important to the class. After each presentation, students construct
a flip book that gives the most important information about income tax, payroll
tax, sales tax, and property tax. Students define gross income and net income, and
then using information provided on gross income and various taxes, they calculate
net income. At the conclusion of the lesson, students return to what they originally
thought they knew about taxes to confirm and correct information.
Texas Essential
Knowledge and
Skills (Target


PFL Math 5.10A: define income tax, payroll tax, sales tax, and property tax
PFL Math 5.10B: explain the difference between gross income and net income
Texas Essential
Knowledge and
Skills (Prerequisite


Math 5.1: Mathematical process standards
Math 5.3A: add and subtract positive rational numbers with fluency
National Standards

CEE Earned Income 4.2: People earn an income when they are hired by an
employer to work at a job.
CCSS Math 5.NBT: Perform operations with multi-digit whole numbers and
with decimals to the hundredths
standards)
standards)
(Supporting standards)

CEE - Council for Economic
Education
CCSS - Common Core State
Standards
PFL Terms
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Time Required
One 45-minute class period
Materials Required
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Income tax
Payroll tax
Sales tax
Property tax
Gross pay
Net income
Employer
Employee
4 sheets of chart paper
Markers
1 copy of Activity 5.1-1 for each student
1 copy of Visual 5.1-1
1 sheet of chart paper for each group
1 sheet of lined notebook paper for each student
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The Case of the Disappearing Paycheck
Grade Level: 5
Procedure
Engage

Scissors for each student
Lesson: 1
Before students enter the classroom, prepare for a word splash. A word splash is a collection
of terms or concepts that students believe connect to the concept they are preparing to
study. After the lesson, the predictions are checked against new learning. Label 4 sheets of
chart paper with each of the following: Income Tax, Payroll Tax, Sales Tax, or Property Tax.
Have markers accessible for students’ responses.
1. Direct students to write any word or phrase or draw a picture on each chart paper to
show what they already may know about each tax. Do not eliminate or correct anything
that students write on the splashes at this time.
2. Say: Whenever you buy gum, candy, or a new CD, you know that you pay more than the
price marked on the item. You probably also know that it’s called tax. Where does that
money go? What is it used for? Allow a brief time for students to share what they think
they know.
3. Have students number off from 1 to 4. Assign an area of the room for each number 1-4.
Direct students to move to the area that represents their number.
4. Display Visual 5.1-1. Have students create a flipbook by using the directions below. The
teacher will model each step.

Fold a sheet of notebook paper along the longest line of symmetry.

Lay the flipbook on your desk so the fold faces left. Divide the paper into four equal
sections by drawing 3 horizontal lines.
fold
Explore
Cutting lines

In each of the four sections, write the following tax categories: Income Tax, Sales Tax,
Payroll Tax, and Property Tax.

Cut the top flap of the paper to the fold along the drawn lines to produce a flipbook.
Each tab should open right to left.
5. Distribute Activity 5.1-1 to each student. Tell students you have an article for them to
read written by a fifth grader named Yul Taxem. Yul reports information for his school
newspaper. He does such a great job that his articles are often reproduced in student
publications across the nation. You found this article in The School Scoop.
Page |2
Grade Level: 5
Explore
Explain
The Case of the Disappearing Paycheck
6. Read and explain the group assignment below.
Lesson: 1

Each group will be assigned one tax category. Your group’s assignment is to become
experts on your assigned tax.
 Group 1 will become experts on income tax.
 Group 2 will become experts on payroll taxes.
 Group 3 will become experts on sales tax.
 Group 4 will become experts on property tax.

Each member of your group should carefully read the section about your tax
category. The group will then discuss the important points about your tax category.

Each group will then create a visual on chart paper that communicates the important
information about your assigned tax. Your visual may include short phrases. Be sure
that your pictures and words are large enough for the class to see.

Next, plan your presentation. Think about how you will explain your tax category.
Each person in the group should participate in the presentation.

You will have _____ minutes to read, create the visual, and plan the presentation. Be
sure to read only the section of the article that explains your assigned tax category.
7. Have each group display their visual and make their presentation. Allow other groups to
ask questions.
8. After each presentation, allow time for students to work in their assigned groups to
capture at least three main points about the tax. These points are to be written under
the flap for that tax category in their flipbook. (See Key 5.1-2)
9. Pose this question to students. Now that you know more about taxes, where does the
money come from that one uses to pay taxes? (Money to pay taxes comes from earned
income.}
10. Instruct students to read the last section of Activity 5.1-1, The Case of the Disappearing
Paycheck by Yul Taxem.
11. Ask students to explain gross pay and net income. (Gross pay is how much an individual
makes before taxes or deductions are taken out. Net income is what is left after taxes
and deductions are subtracted from your gross pay. This is the amount the employee
actually receives.)
12. Direct students to turn their flipbook over to the back and write the definitions for gross
pay and net income in their own words on the upper portion of the paper.
13. Instruct students to read the scenario on Activity 5.1-1 in the box at the bottom of the
third page. Have students write the information and complete the calculations on the
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Grade Level: 5
The Case of the Disappearing Paycheck
lower portion of the back of the flip book. (See Key 5.1-2)
Lesson: 1
Here’s what Mr. Cash made in a one week period. He worked 40 hours and made
$14.50 per hour. This means that he earned $580.00 that week. His federal
withholding tax was $47.00, Social Security tax paid was $35.96, and his Medicare tax
contribution was $8.41
14. How much did Mr. Cash pay in taxes that week? $91.37
What was his final net income? $488.63
How did you determine his net income? Gross income – taxes = net income
Evaluate/End
15. Have students summarize the lesson by explaining the role taxes play in gross pay and
net income.
16. Direct students’ attention back to the paper splashes done earlier and note which
information is correct, which information needs minor tweaking, and which information
should be deleted.
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Grade Level: 5
Activity 5.1-1
The Case of the Disappearing Paycheck
Name _______________________________
Lesson: 1
Class Period _________
The Case of the Disappearing Paycheck
By Yul Taxem
Have you ever wondered why you have to pay more for items than what is listed on the
tag? If Mom makes $10 an hour and she works 40 hours a week, why is her weekly
check less than $400? Why do people have to pay money to the government on or
before April 15th of every year?
I learned a great deal when my parents were working on their taxes. What is a tax? A tax
is money sent to our government. This money is used to support programs in our
country. They pay for such things as our military, helping people in need, and providing
money for education, along with many other government programs. Let me share with
you what I learned.
Income Tax
Income tax is money paid to the federal government based on your income, how much
money you earn. Individuals who earn less money pay less in income taxes than
someone who earns much more money. Everyone who makes a certain amount of
money is required to pay income taxes or face penalties. There are ways that people can
reduce the amount of money they must pay. Subtracting these expenses is called
deductions. Some examples of deductions include the interest paid on your home loan,
certain medical expenses, and charitable donations. Another way income taxes are
reduced is by the number of people supported by your household income. The more
people who are in the family and receive their housing, food, and other necessary
expenses from the family, the higher deduction the family can take. A small family gets a
much smaller deduction than a large family. Federal income tax is due every year by
April 15th.
In addition to federal income taxes, many states have a state income tax. Texas is not
one of these states. Texans pay only federal income tax.
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Grade Level: 5
The Case of the Disappearing Paycheck
Payroll Tax
Lesson: 1
There are two types of payroll taxes: Social Security tax and Medicare tax. Both of these
taxes are taken out of your paycheck and paid to the federal government.
Social Security is money that one gets back when one retires or becomes disabled.
Medicare helps pay for many medical services for people 65 years or older.
Half the payroll tax is paid by the employer and the other half by the employee as
money withheld from earnings. The employer matches, or pays the same amount, that
is withheld from the employee’s paycheck for Social Security and for Medicare.
In addition, the employer also pays for unemployment insurance. If one loses his/her
job, he or she may collect unemployment insurance to help pay his bills for a reasonable
time.
Sales Tax
Sales tax is a tax paid by consumers on purchased goods and on some services. Most
states require consumers to pay sales tax when they buy or rent goods. The rate that
must be paid can vary from as little as paying 5 cents to 10 cents for every dollar spent.
So, for a $10.00 shirt, you may have to pay as little as 50¢ in sales tax to as much as
$1.00, depending on where you live. Although a state sets a specific percentage of the
purchase price as the sales tax, local governments may add an additional amount to this
rate. In 2013, the sales tax rate in Texas was 6.25%, but some areas paid as much as
8.25% in sales tax because of additional local taxes.
In most states, items that are considered essential to basic survival are exempt from
sales tax. Some of these items that are exempt from sales tax are unprepared food and
medical prescriptions. Most of the money collected from sales taxes is used for
transportation (roads and bridges), public education, and aid to local governments for
services they provide the citizens.
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Grade Level: 5
The Case of the Disappearing Paycheck
Property tax
Lesson: 1
Property tax is tax that is paid to the local government on real estate. Buildings, homes
and land are considered real estate. The local government decides on the value of the
real estate and then bills the owner for a percentage of that value. If improvements are
made to the real estate, then the taxes on that property will most likely increase.
Improvements would be things such as building an in-ground swimming pool in your
yard, adding an addition to your house, or putting in a new garage. Anything that makes
the property more valuable and/or better is an improvement. On the other hand, if the
value of the property decreases due to poor maintenance or the age of the building,
then property taxes may go down.
Property taxes are mainly used to support local education, police and fire protection,
the work of the local government, and some free medical services.
Gross Pay and Net Income
Your gross pay is how much you make before taxes and deductions are taken out. It is
the figure people are looking for when they ask how much you make in a month or in a
year.
Net income is calculated by starting with the gross income amount on a paycheck and
then subtracting all the taxes paid to the government. These taxes include Social
Security tax, Medicare tax and income tax. The result is the amount of money you can
actually take home to spend, save, and share.
Your teacher will give you directions how to calculate net income using the following
information:
Here’s what Mr. Cash made in a one week period. He
worked 40 hours and made $14.50 per hour. This means
that he earned $580.00 that week. His federal income tax
was $47.00, Social Security tax paid was $35.96, and his
Medicare tax was $8.41. What was his gross pay and net
income?
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Grade Level: 5
The Case of the Disappearing Paycheck
Visual 5.1-1
Lesson: 1
On back of flip book
On front of flap
Income Tax
Gross Pay:
(student’s definition)
Property Tax
Sales Tax
Payroll Tax
Net Income:
Page |8
(student’s definition)
Grade Level: 5
The Case of the Disappearing Paycheck
Lesson: 1
Key 5.1-1
On back of flip book
Income Tax
 Paid to the federal government based
on your income
 Citizens do not pay taxes, or they pay
reduced taxes, on deductions such as
medical expenses, interest on home
payments, charitable donations
 Due April 15th
Payroll Tax
On front of flap
 Paid to federal government
 Deductions from pay for income tax,
Social Security tax, and Medicare tax
 Employer pays matching amount into
Social Security and Medicare, plus pays
for unemployment insurance
Gross Pay: The amount you
earn before taxes are paid.
Net Income: The amount you
receive after taxes are paid.
Gross Pay:
$580.00
Sales Tax
Income tax:
 Paid on goods and some services
 Items essential for basic survival are
exempt
 Used for transportation (roads and
bridges), public education, and aid to
local governments for their citizens
$47.00
Social Security tax: $35.96
Medicare tax:
$8.41
Total payroll taxes: $91.37
Property Tax
Gross Income:
 Paid to local government based on
value of real estate
 Can increase or decrease
 Used to support local education, fire
and police protection, the work of the
local government, and some free
medical services
Page |9
Payroll taxes:
Net Income:
$580.00

$91.37
$488.63